Highest Market Caps

An extra Saturday this month gave me the chance to tackle something other than the two news posts for a typical month. I decided to redo some of the widgets in the right navigation bar.

I created the single news feed in the early days of this blog -- documented in the post Market Resources (August 2015) -- and haven't touched it since, although in the years since then the symbol BTCS has evolved and been assigned to different companies. Using both 'bitcoin' and 'blockchain' as the basis for a Yahoo search, I couldn't find a good symbol to replace it. The most relevant Yahoo page...

• All Cryptocurrencies Screener

...didn't lend itself to a feed, so I added it as a resource link. Another possibility was...

• Cryptocurrencies with Highest Market Cap

...but the 'Screener' link also had market cap plus a lot more data. I took the top-3 market caps and developed an RSS feed...

• http://finance.yahoo.com/rss/headline?s=BTC-USD,ETH-USD,XRP-USD

to generate news stories on Bitcoin, Ethereum, and Ripple. This replaced the BTCS feed I used previously.

Bitcoin in the News : 2020-01 More++

While I was preparing the previous post Bitcoin in the News : 2020-01 Price, I collected links to a number of Cointelegraph articles summarizing key trends in 2019. There were eleven:-

• 2019-12-24: 10 Best Performing Cryptos of 2019 Not Named Bitcoin • 'In January, the total market capitalization of this burgeoning sector was around $130 billion.'
• 2019-12-27: US Bitcoin Derivatives Market, Highlights of 2019
• 2019-12-28: Around the World in 2019 -- A Landmark Year for Crypto Taxation
• 2019-12-29: Five Countries Where Crypto Regulation Changed the Most in 2019
• 2019-12-30: The Biggest Crypto Winners and Losers of 2019
• 2020-01-02: Privacy Coins in 2019: True Financial Freedom or a Criminal's Delight?
• 2020-01-02: 'Cryptocurrency Will Not Die': Mainstream Media on Bitcoin in 2019
• 2020-01-05: Biggest Crypto Price Movements of 2019 • 'Its biggest 24-hour loss constituting a 10% drop on July 11'; see Bitcoin in the News : 2019-07 Price (August 2019).
• 2020-01-05: Most Significant Hacks of 2019 -- New Record of Twelve in One Year
• 2020-01-05: Who Got Gifts from Crypto Santa in 2019… and Who Got Coal
• 2020-01-13: Lawmakers Finally Took Data Privacy Seriously -- 2019 Regulatory Roundup

Looking at other stories from January, the two most interesting were also from Cointelegraph:-

• 2020-01-15: Bitcoin SV Prices Soar After Craig Wright Complies With Court Order • '[Wright] has received the public keys associated an $8.9 billion crypto fortune called the Tulip Trust'
• 2020-01-18: Bitcoin SV Drops 40% as Lawyer Admits Craig Wright Has No Private Keys

My first reaction to this was 'So what?'. Why should having Bitcoin (BTC) keys make Bitcoin SV (BSV) more valuable? Why should not having the BTC keys make BSV less valuable?

The first story ('Prices Soar') ended, 'With the day’s gains approaching 100%, this has some calling Wright’s tactics a straight-up exit scam.' Then it dawned on me: the larger the capitalization for a cryptocurrency, the more interest it will attract. The more interest it attracts, the more money will flow into the coin, thereby driving prices further. This is entirely in line with the assumption that a coin's price is mainly driven by psychological factors.

Other than the steady rise in price, January was a light month for additional bitcoin news. One more story, more forward looking than the others, is worth mentioning:-

• 2020-01-19: 5 Major Bitcoin Trends To Watch In 2020
  - Bitcoin Halving 2020 [May]
  - Bitcoin’s Transition to Digital Gold
  - Schnorr, Taproot, and Tapscript ['all expected to be included in the same soft-forking upgrade of the Bitcoin network']
  - Lightning Network and Liquid Sidechain Adoption
  - Institutional Money

There is some jargon in that last story that should be investigated. I'll do that another time.

Bitcoin in the News : 2020-01 Price

You know the routine. First, recap last month's price post, Bitcoin in the News : 2019-12 Price:-

The November chart was the fourth out of five in the second half of the year to show a falling trend. • The December chart shows neither a rising nor a falling trend. It was basically flat.

Then show the Cointelegraph chart from last month. In January, the price was up, up, and away.

Bitcoin (BTC) Price Index

Then flag any volumes that stand head-and-shoulders above the others:-

2020-01-08 0000 (cluster peak)
2020-01-14 1600 (cluster peak)
2020-01-30 1600 (small jump)

Because they don't correspond to any sharp change in the price, none of those were typical of recent months. The first two, labelled 'cluster peak', occurred at the end of a multi-day rise in price. The last, 'small jump', occurred in a plateau. Along with the monthly routine being broken, the Cointelegraph Analysis category flagged a couple of longer term trends.

• 2020-01-14: Crypto Community Eyes US–Iran Crisis As Tensions Flare • 'For one week, the Iran–United States military crisis gripped the crypto community. It began on Jan. 3 with a U.S. drone strike on a convoy traveling near Baghdad International Airport, killing Iranian major general Qasem Soleimani of the Islamic Revolutionary Guard Corps. The price of Bitcoin (BTC) soared.'
  
  
• 2020-01-21: CME's Futures Options Sprinted Out of the Gate but a Marathon Lies Ahead • 'In the two years since it launched cash-settled Bitcoin futures, CME [Chicago Mercantile Exchange] has firmly established itself as a leader in the regulated crypto derivatives space despite not always being the first to market. In December 2017, it launched regulated Bitcoin futures a week after rival exchange CBOE [Chicago Board Options Exchange]. However, it only took 15 months for CBOE to completely withdraw from the market. By August, CME had announced record highs for Bitcoin futures trading. Most recently, Bakkt came into the market ahead of CME with its regulated options on Bitcoin futures. However, after successfully launching its own options contracts on Jan. 13, it seems that the Chicago-based CME is once again emerging at the top of its game.'

A few posts in Cointelegraph's Price Analysis tag confirmed both trends.

• 2020-01-08: Price Analysis Jan 8: BTC, ETH, XRP, BCH, LTC, EOS, BNB, BSV, XMR, ADA • 'The crypto markets continue to respond to the events happening in the United States-Iran conflict. Any sign of escalating tensions is boosting the crypto markets higher. Google Trends shows that the searches for terms “Bitcoin” and “Bitcoin Iran” have surged in the past few days. This shows that investors are considering Bitcoin as a safe haven asset, similar to gold.'
  
  
• 2020-01-15: Price Analysis Jan 15: BTC, ETH, XRP, BCH, BSV, LTC, EOS, BNB, TRX, XMR • 'The crypto space is making a comeback and the rally is being led by altcoins. While several altcoins might participate in the initial rally, we believe that the market will start differentiating between each cryptocurrency based on its fundamentals [?]. Hence, traders should avoid buying the non-performers expecting a repeat of the previous bull market when every altcoin staged a parabolic rally.'
  
  
• 2020-01-31: Price Analysis Jan 31: BTC, ETH, XRP, BCH, BSV, LTC, EOS, BNB, ADA, ETC • 'The growing popularity of crypto derivatives indicates institutional players are gradually entering the space. The Chicago Mercantile Exchange group Managing Director and Global Head of Equity Index Alternative Investment Products, Tim McCourt, said: “CME Bitcoin futures have surpassed $100 billion in total notional value [?] traded since their launch in December 2017.”'

The words marked '[?]' require further research. (1) Given that prices are primarily driven by psychology, what are 'altcoin fundamentals'? (2) What is the measure of 'notional value'? I'll take that up some other time.

I don't know if I've mentioned it before, but the ten coins listed in each 'Price Analysis' title are ordered by total market value at the time of the post. The changes from post to post might be worth analyzing. Ditto for the exchanges (currently five) listed near the top of my monthly price chart.

Bitcoin in the News : 2019-12 More++

For the third year straight -- see Bitcoin in the News : 2018-12 More++ for the previous edition -- I'll summarize all of last year's monthly price charts in a single chart.

As I've already noted in several previous posts, the first half of the year showed a rising trend, the second half of the year a falling trend. The two previous years followed a similar pattern for longer periods: 2017 rising [the great bull market], 2018 falling [the great bear market]. The trend is your friend? December [2019-12] was flat.

In last week's post, Bitcoin in the News : 2019-12 Price, I wrote,

I'll come back to [those high-volume periods] when I look at other news sources in next week's '2019-12 More++' post.

***

Later: After updating that post, I was left with a few more December stories worth noting -- all of them somehow negative. For example, two involved Ponzi schemes:-

• 2019-12-11: Cryptocurrency rocked by massive Bitcoin fraud (yahoo.com) • 'US prosecutors have arrested three men while investigating an alleged $722 million Bitcoin scam. The Justice Department has branded the activities of the 'BitClub Network' as a 'high-tech Ponzi scheme' that lured victims with fake Bitcoin mining profits while taking money from investors who were rewarded for recruiting new members.'
  
  
• 2019-12-19: That $2B Ponzi scheme caught dumping Bitcoin just moved its $105M Ether stash (thenextweb.com) • 'Just days after cryptocurrency analysts suggested that a $2 billion Chinese Ponzi scheme was stifling Bitcoin‘s price, its enormous Ethereum stash is on the move. [...] Earlier this week, Hard Fork reported that the PlusToken Ponzi scheme had sought to liquidate $2 billion worth of cryptocurrency swindled from unsuspecting investors.'

That second story is badly written and incoherent, but might be worth keeping in mind. The next story, from a veteran bitcoin analyst, is better written.

• 2019-12-21: A U.S. Fed Official Made A 'Significant' Bitcoin Warning (forbes.com) • Lael Brainard, Federal Reserve governor;'One study estimated that more than a quarter of bitcoin users and roughly half of bitcoin transactions, for example, are associated with illegal activity.'

I keep coming back to the same question: Why would an honest person want to mingle with the type of people involved in crypto currencies?

Bitcoin in the News : 2019-12 Price

In last month's post, Bitcoin in the News : 2019-11 Price, I observed,

The November chart was the fourth out of five in the second half of the year to show a falling trend.

The December chart shows neither a rising nor a falling trend. It was basically flat with some bumps along the way.

Bitcoin (BTC) Price Index

As for spikes in volume, three were more significant than the others, where the last two were part of a cluster:-

2019-12-05 1200 (Spike in price)
2019-12-16 1600 (Drop)
2019-12-18 1200 (Jump)

As usual, Cointelegraph's Analysis category had nothing to say about those high-volume periods. For the first time, the service's Price Analysis tag also had nothing to say beyond the analysis of technical patterns. I'll come back to the subject when I look at other news sources in next week's '2019-12 More++' post.

***

Later: Re 'I'll come back to the subject', I found a number of stories in Forbes. The date on the first story ('spike in price') doesn't quite match what I calculated, but that just underscores how unsophisticated my tools are.

• 2019-12-04: Bitcoin Crashes After Sudden Leap Higher (forbes.com) • 'Bitcoin and other major cryptocurrencies, including ethereum, Ripple's XRP, litecoin, and bitcoin cash, have suddenly leaped, with bitcoin rising almost $1,000 in just minutes. [Update:] After suddenly surging, the bitcoin price has given up almost all of its gains, dropping to around $7,200 per bitcoin.'
  
  
• 2019-12-04: Bitcoin’s Surge This Morning Shows Market's Vulnerability (ditto) • '"As I write this morning, today's price spike does seem a bit suspicious," said Mati Greenspan, founder of the newsletter Quantum Economics. He pointed to "the sudden movement on an otherwise uneventful day, the low volumes across exchanges, the quick retracement after the move. It all points to the assumption that this was the outcome of a single player with a large buy order. Or in other words... a large whale stacking sats." Tim Enneking, managing director of Digital Capital Management, offered a similar perspective. "With this unusually low volume crypto markets have experienced, any single, large transaction has an [outsize] impact," he stated. "This is true both because the transaction itself will affect markets and because, in the absence of other signals, market watchers overreact to such a transaction and exaggerate the move, regardless of direction," said Enneking.'

A 'large whale stacking sats' makes sense if you know that 'sats' is short for 'satoshis', i.e. the smallest unit of bitcoin. The spike shows how easily the price of bitcoin can be manipulated. Introduce a large transaction into a calm market and watch as other traders react, like dropping a stone into a calm pond and watching the ripples. The next set of stories is from later in the month.

• 2019-12-16: Bitcoin Moves Sharply Lower Again As Other Major Cryptocurrencies Go Into Free Fall (forbes.com) • 'Bitcoin, which yesterday dropped by 3.5%, has moved lower again, dropping over 5% since this time yesterday [...] The cause of the sudden sell-off was not immediately clear, however, analysts have noted a drop in crypto market trading volume recently. [...] In periods of low trading volume, crypto prices are more vulnerable to so-called whales moving the market by placing massive buy or sell orders at a little above or below current market rates. These can trigger trading algorithms that then send prices sharply higher or lower and can be a sign of market manipulation.'
  
  
• 2019-12-18: Bitcoin Recovers After Falling To Lowest Since May (ditto) • 'Bitcoin prices bounced back today, rising more than 10% in a matter of hours after declining to their lowest in more than seven months. [...] Some analysts described today’s rally as being purely technical in nature.'
  
  
• 2019-12-19: Is This Why Bitcoin Suddenly Rebounded Yesterday? (ditto) • 'Bitcoin and cryptocurrency markets suddenly rebounded yesterday, with the bitcoin price climbing back above the psychological $7,000 per bitcoin mark after a sell-off earlier in the week. [...] A report out earlier this month found the cost of creating new bitcoin, a process known as mining, now averages around $6,300 per bitcoin -- something that could mean bitcoin is perhaps unlikely, but not guaranteed, to fall below this level.'

The phrase 'purely technical in nature' is not an explanation. It's an admission of ignorance. On top of that, the last explanation makes no sense to me. Does the price of gold depend on the cost of mining it?

If the price drops too low, miners go out of business, thereby reducing new supply. If the supply drops, the prise will rise -- assuming demand remains steady. Then new miners will start operation. This is necessarily a medium term phenomenon, not something that happens in a few days. Or am I missing something? (It wouldn't be the first time.)

Bitcoin in the News : 2019-11 More++

In my previous post, Bitcoin in the News : 2019-11 Price, I looked at one burst of bitcoin activity, noted the explanations offered by analysts, and wondered,

Rumors and market manipulation -- why would anyone entrust significant sums to this market?

For this current followup post, when I started to gather news stories from the same month, the first story that popped up multiple times was on the same theme. The first two occurrences were:-

• 2019-11-04: Did Bitcoin Price Manipulation Fuel 2017 Surge? Study Says Yes (bloomberg.com) • 'Academics update paper that alleges manipulation using Tether'
• 2019-11-04: Study: Single anonymous market manipulator pushed bitcoin to $20,000 (cnbc.com) • 'A forensic study on bitcoin’s 2017 boom has found that nearly the entire rise of the digital currency at the time is attributable to “one large player,” although the market manipulator remains unidentified.'

It happens that I had already mentioned that story -- from the same source -- last year in Bitcoin in the News : 2018-06 More++:-

2018-06-13: Much of bitcoin's 2017 boom was market manipulation, research says (cnbc.com) • 'By tracking Bitfinex transactions, which are recorded on a public ledger, [University of Texas finance professor John Griffin] found that another cryptocurrency, tether. was used to buy bitcoin after large price falls.'

What's the difference between the two incarnations of the research? The first identified possible market manipulation; the second attributed it to a single entity. As I understand it, that entity created money by issuing unbacked tether, then used that funny money to buy bitcoin, thereby fueling its dramatic rise in 2017. If so, the possibilities to do the same by other entities are limitless. No printing press required.

As for the burst of bitcoin activity in the '2019-11 Price' post, I also found multiple stories. The first was:-

• 2019-11-22: Stark China Warning Causes Bitcoin To Suddenly Crash 10% As Other Major Cryptos Nosedive (forbes.com) • 'The Shanghai-based central bank also warned against conflating the country's interest in blockchain with bitcoin and crypto. [...] The bitcoin and cryptocurrency industry has been rocked by reports of Chinese police raids on the offices of major bitcoin and crypto exchanges Binance and Bithumb in the country over the last week -- though both have denied the raids took place.'

And if those two stories weren't bad enough, consider this story that appeared multiple times in another of my Google News interests, botnets:-

• 2019-11-27: Stantinko botnet mines Monero using YouTube (finance.yahoo.com)

Money talks and the bad guys are everywhere. I'm holding my nose as I post this.

Bitcoin in the News : 2019-11 Price

In contrast to the first half of 2019, where five out of six monthly bitcoin price charts showed a rising trend, the November chart was the fourth out of five in the second half of the year to show a falling trend. The only exception was last month's Bitcoin in the News : 2019-10 Price.

My usual technique to understand a chart is to identify periods of high volume and find relevant discussions in the bitcoin / cryptocurrency press. What does the November chart say?

Bitcoin (BTC) Price Index

In November there were more than a half-dozen periods showing jumps in volume. The most significant cluster was:-

2019-11-22 0800 (Drop)

Although there was no corresponding discussion in Cointelegraph's Analysis category, the site's Price Analysis tag had a couple of relevant articles.

2019-11-22: Price Analysis 22/11: BTC, ETH, XRP, BCH, LTC, EOS, BNB, BSV, XLM, TRX • 'Fear gripped the markets on the news that Chinese authorities had raided the offices of the leading cryptocurrency exchange Binance. This negated all the positive effects that had accrued following President Xi Jinping’s endorsement of blockchain technology. Though Binance denied reports of any raids, price action within the sector has remained subdued.'

So the drop was sparked by a rumor? For more about 'President Xi Jinping’s endorsement', see the '2019-10 Price' post.

2019-11-25: Price Analysis 25/11: BTC, ETH, XRP, [...] • 'We believe that the current dip is showing signs of a bear trap.'

So the drop was another skirmish in the ongoing battle between bulls and bears? Plant a rumor and act on the confusion provoked by that rumor. That sounds like market manipulation. Rumors and market manipulation -- why would anyone entrust significant sums to this market?

Although Binance has been mentioned occasionally on this blog, what is it exactly? Wikipedia's Binance page says,

Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies. Since early 2018, Binance is considered as the biggest cryptocurrency exchange in the world in terms of trading volume. [...] The company was founded in China but moved its servers and headquarters out of China and into Japan in advance of the Chinese government ban on cryptocurrency trading in September 2017. [...] As of January 2018 it was largest cryptocurrency exchange with a Binance coin (BNB) market capitalization of $1.3 billion. [...] On May 7, 2019, Binance revealed that it had been the victim of a “large scale security breach” in which hackers had stolen 7,000 Bitcoin worth around U.S.$40 million at the time.

The relationship between Binance and 'Binance coin (BNB)' isn't clear to me. BNB is one of the coins listed in the Cointelegraph articles I've quoted above, so it must be significant. I'll look at that another time.